Cuomo: Flexible about pension system change

ALBANY -- Gov. Andrew M. Cuomo indicated Monday that he could drop his proposal to create an optional 401(k)-style plan as long as he gets changes to the pension system that keep costs down.

The governor's proposed budget would create a pension tier to give new employees the option of choosing a less generous pension plan or a 401(k)-style savings plan. The goal is to increase government workers' contributions to retirement plans and reduce benefits to save state and local governments billions of dollars over the long term.

"I'm not saying, 'This is my plan, it's my way or the highway,' " Cuomo told reporters following a speech at a conference of state mayors. "I was born flexible. I've gotten more flexible as governor. I'm a veritable Gumby."

Both houses of the legislature plan to release their own budgets on March 12, but neither has said whether the proposals would include changes to the pension system.

Cuomo did not specify which changes he would accept. "There is a negotiation obviously with the legislature at the end of the day, it's about the money, it's about the savings and where we get the savings," he said.

Most of the savings in Cuomo's proposal would come from changes to the defined benefit plan. Last week, he said pension reform must be in the budget but downplayed the significance of the 401(k) proposal, which he said would account for only $8 billion of the projected $113 billion that state and local governments would save over 30 years. The state budget office projects that only 10 percent of workers would choose a defined contribution plan over a traditional defined benefit plan.

State Comptroller Thomas DiNapoli Monday repeated criticism of the 401(k) proposal, which he said was a "real problem." Speaking at the same conference, DiNapoli said such defined contribution plans did not provide adequate financial security for retirees.

State and local governments' pension costs have risen sharply since the financial meltdown of 2008 required the governments to make up for some of those losses. Because contributions are calculated based on a five-year average, the effects of that meltdown will continue to increase pension costs for the next two years.

DiNapoli Monday called for unions to be included in pension discussions as they were in 2009, when the state legislature approved the last change in the pension system. Earlier in the day, Cuomo said that including them would give "unions veto power over any pension proposal."

"The unions weren't elected by the people of this state. The Assembly members were. The senators were. And those are the ones I'm going to hold accountable," the governor said.